How much do I spend on Marketing & Advertising?
This is a popular question among future and current small business owners alike. I often receive business plans for future businesses that state they don't need marketing or will use social media (read: it is free) to attract new customers.
A common practice to determine adequate spending is establishing a percent (%) of projected revenue as a marketing budget. This budget would include all marketing-related activities including advertising. The U.S. Small Business Administration recommends 7-8% of your net profit margin (bottomline profit) is in the 10-12% range.
Much of this depends on industry, if new or established business, and other factors. So we have all heard, "It takes money to make money." Marketing is included in this. If you establish a marketing system where results are analyzed and efforts are optimized, then investing in marketing doesn't have to be a scary endeavor.
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Contributor: deborah kania, SBC director
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